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QUEST MEANS BUSINESS
Bill Cosby Found Guilty in Sexual Assault Trial; White House Has Just Released Two Photographs of the New Secretary Of State, Mike Pompeo; Corporate Earnings In America Back With A Vengeance, Stocks Surging; Korean Leaders to Meet Soon at Historic Summit; Trump to Visit United Kingdom on July 13; Nine Teenagers Killed as Flash Floods Hit Israel; U.S. Senate Approves Mike Pompeo as Secretary of State; G.M. Unveils $4.3 Billion Lifeline for Korea Unit; Big Three U.S. Automakers Report Earnings; Ford to Cut Range of Vehicles Sold in the U.S.; Microsoft, Intel Beat Forecasts with Profits and Revenue Rise; Starbucks Earnings In Line with Expectations; Strong Earnings Boost U.S. Markets; New Karate Combat Fighting League Takes on UFC; Boracay Island Shut Down for Cleanup
Aired April 26, 2018 - 16:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN HOST: Closing bell ringing on Wall Street, Dow Jones Industrials 1% up, all the major indices are higher. A good pay for
thoughts, not for my throat, I will report about later. Come on. Oh, good grief, that was the most abysmally pathetic gavel that we have had in 2018.
Sir, you should be ashamed of yourself on Thursday, the 26th of April.
(START VIDEO CLIP)
GLORIA ALLRED, AMERICAN WOMEN'S RIGHTS ATTORNEY: Bill Cosby, three words for you. Guilty, guilty, guilty.
(END VIDEO CLIP)
QUEST: Bill Cosby is convicted of sexual assault. The attorney, Lisa Bloom joins me live from Los Angeles in just a moment.
Amazon's results are out any minute. We will bring you those numbers as soon as we have them. And a new challenger enters the ring. Karate
comeback is the bout to take on, the UFC.
I am Richard Quest, live in the world's financial capital on a spectacular spring day, where of course I mean business.
Good evening, breaking news tonight. One of the world's most famous entertainers, America's dad has been found guilty of sexual assault. A few
moments ago, Bill Cosby was convicted for drugging and sexually assaulting a woman in 2004. He now faces up to 10 years in prison on each of the
More than 50 women have accused Cosby of sexual misconduct in recent years. This was the first allegation to result in criminal charges and conviction.
The attorney, Gloria Allred says the ruling shows women are finally getting justice beyond the #MeToo Movement.
(VIDEO CLIP STARTS)
ALLRED: We are so happy that finally we can say, women are believed and not only on #MeToo, but in a court of law where they were under oath, where
they testified truthfully, where they were attacked, where they were smeared, where they were denigrated, where there were attempts to discredit
them, and after all is said and done, women were finally believed and we thank the jury so much for that.
(END VIDEO CLIP)
QUEST: This case is the first celebrity sexual assault trial since the #MeToo Movement began. And many people were extremely interested to get a
feel for what it has changed. Lisa Blue represents Janice Dickinson.
Janice Dickinson testified in court that Cosby sexually assaulted her too. Lisa Bloom joins me now from Los Angeles. I suppose the first most obvious
question is your client's response bearing in mind her own claims of course were barred by statutes of limitations.
So, how does Janice who I know you've been talking to in the last hour, how does she regard the events of this afternoon?
LISA BLOOM, AMERICAN TRIAL LAWYER: Well, Janice is absolutely thrilled as I am. You know, this has been a long time and coming. I represent her in
a civil suit and we have been fighting Bill Cosby there in a defamation case for three years and winning every step of the way. Winning in the
trial court, winning on appeal, but he just keeps appealing and appealing.
But this was first chance to get justice on the criminal side and Janice was one of the five prior bad acts witnesses. I prepared her at length for
what I was sure would be brutal cross examination, but once she was up there on the stand, of course, she's up there all alone and I think she did
beautifully, as did the other four prior bad acts women, and of course Andrea Constand herself who this case was all about.
This is just a breathtaking day for justice for survivors of sexual abuse.
QUEST: What do you think was different between this trial and the previous one, and we'll come into the #MeToo Movement and how that played in, in
just a moment, but in terms of the evidence that was allowed. In terms of the prior bad acts, this was a different type.
BLOOM: Very significant differences, important differences. For the defense, they got to call a witness they couldn't call last time, a woman
named Marguerite Jackson who said that Andrea Constand said she was going to set up a celebrity and make money off of it.
Obviously, she was not believed, but she was allowed to testify. For the prosecution, their first witness and this was a brilliant move, as a trial
lawyer myself, I give them all the credit in the world for this, they called in an expert psychologist who talked about rape myths and who
debunked all of the myths around sexual assault, like women don't typically go to the police right away when they are sexually assaulted.
If it is an acquaintance rape situation, as it is with Cosby, they continue to have a relationship with him. She explained all of that to the jury...
BLOOM: ... it really framed the case and then of course, the five prior bad acts witnesses. Women in their 50s and 60s. One of them in tears
throughout her testimony. Another one, you know, very stoic. Another one kind of humorous and laughing at times. I mean, these are just real
people, authentic to who they are telling their story and I'll tell you, Richard, every time one of them in the courtroom got to her story and she
said, "And then he gave me a pill," you could have a heard a pin drop in that courtroom. I mean, it was absolutely riveting.
QUEST: And how do you think the #MeToo Movement - because discussing it in the office when the verdict came out, you know, people were sort of saying,
"Well, the first trial was prior to #MeToo, the second trial afterwards," and that sea change that Gloria spoke about, we have to add - I mean, how
do we quantify that sea change?
BLOOM: Yes, and by the way, Gloria is my mother and I applaud her for all of her work representing 33 women accusing Cosby.
So, here is how it changes things. I can tell you, as a trial lawyer, you know, these are the waters in which we swim. I can't take my jury and put
them in a vacuum. They live in a particular culture. Until the #MeToo Movement, for a large part of the population, women were not believed and
now, we all live in a culture where thousands upon thousands of women have come out on social media, in their families, in their workplaces and said,
"You know what? This happened to me too," and I don't think very many women are surprised, but I think a lot of men have been.
And a lot of men have been educated, wow, all of these women talking about sexual assault, I guess, it's real. You know, this is my mother, my
sister, my girlfriend. If they are all talking about it, you know, it educates people.
QUEST: How do you now prevent it from going back into the cupboard? I mean, the risk with all of these movements is there is this phenomenal
forward motion, but it's not built upon with deep foundations of concrete.
Now, yes, Cosby has been convicted and that could be held up, not just as a symbol, but as a talisman if you like of it. What needs to happen next?
BLOOM: Well, I've got news for you. We're just getting started in the #MeToo Movement and in my law firm, we have 14 lawyers and hundreds of
cases and most of them are sexual assault against high profile men and women are finding their courage. They are standing together, they are
supporting one another. You know, nobody has gone back. We're only going forward and we're getting a lot of support. We are getting a lot of juries
coming back with multimillion dollar verdicts in discrimination and harassment cases.
So, this is an exciting new day where women are actually being believed.
QUEST: I want to read one of your tweets, Lisa, if I may. You tweeted this afternoon, "I am already tired of hearing commentators say, 30 years
Cosby faces is a life sentence. He had 80 years of freedom accused by 60- plus women of sexual assault. He's had a long life of freedom, now he'll serve a little time." Do you think he's - I mean, do you think he will get
the full 10 years on each concurrently?
BLOOM: No, there's no way. He has no prior criminal history. The court will take into account his age and the fact that he is legally blind and
probably has some significant medical problems. You know, none of that matters to me. Whatever that happens to him is going to happen to him.
What matters to me is that all of the women who spoke out are now being vindicated.
I sat in that courtroom and held their hands and hugged them during the first week. You know, I was with my client and as she is outside smoking
and anxious and nervous, you know, they have all gotten justice and accountability today. Whatever happens to Cosby, that's fine.
QUEST: Lisa, I want to end on a really positive note for you on obviously a great day for you, your mother and the movement, but there will be women
watching tonight because CNN International in the many jurisdictions and countries in which we are seen where the role and the legal status of women
is miles apart from what you are now talking about tonight.
They can't even imagine having the same sort of freedoms, abilities, the ability to actually call out on sexual assault, what's your message to them
BLOOM: Well, first of all, there are feminists in all of those countries who are speaking out, who are standing up and I stand with them. Find the
feminists, find the women standing up in your countries and trying to change the laws because they are there whether it's Saudi Arabia, Iran,
Somalia or anywhere else. There are women who are very bravely taking on the status quo and saying, "We are equal human beings," so stand with them.
QUEST: Lisa, always wonderful to have you on the program. Thank you for taking the time.
BLOOM: Thank you so much.
QUEST: Now, breaking news, more breaking news on a busy day. The White House has just released two photographs of the new Secretary of State, Mike
Pompeo, but they were taken with the North Korean leader, Kim Jong-un during that secret Easter weekend visit just to North Korea.
You remember, he was the Director of the CIA at the time of the meeting, now he is being confirmed as...
QUEST: ... the US Secretary of State. The White House has released this extraordinary photographs. And while we look at that, let me just tell you
that Pompeo is currently on his way to Brussels for a NATO meeting.
After Brussels, the new Secretary of State will go to Israel and then he goes on to Jordan.
Corporate earnings in America are back with a vengeance and stocks are surging. Look at this, Dow is up at 1%, NASDAQ is up 1.5%, S&P 500 is at
1%, which means green are strong, are flashing, a brilliant green right across the markets today.
Almost all sectors rose. The tech's obviously were the best of the day. And if you look at the share case which is tracking the movements of stocks
in the 24 hours immediately results, the best metric of how investors and how the market views those results.
So, we've got Facebook. Now, Facebook had excellent revenue numbers, user surge amount online surge, shrugged off privacy scandals, up 9%. We don't
have a 9% on there, so it is way up there. That is Facebook.
Take Visa - Visa is up some - oops, Visa is up some 5% after the payment volume rose. They raised their forecast and where the airlines are hit by
fuel charges, but Southwest, so taking a look at the other markets.
Time Warner and AT&T were both down. Fiat Chrysler, GM, and Ford focusing on SUVs, and that we'll have all of these numbers a little bit later in the
And also this hour, we are going to hear from Amazon, Intel, Microsoft and Starbucks.
So, when we come back after the break, we will have Paul and Clare. Paul, welcome on board.
UNIDENTIFIED MALE: Thank you, sir.
QUEST: You've got a window and aisle. We'll find you some chairs. And then we'll have to break.
Housing shares are spiking up 7% after hours trading and there's one very simple reason. The earnings have blown past our expectations with profits
more than doubling and sales up 43% over last year. Clare is with me.
CLARE SEBASTIAN, CORRESPONDENT, CNN: They crushed estimates, Richard. There's no other way to put it. The sales did stay up 43% to $51 billion,
$49.9 million was what was expected, but it's really on the profits where they absolutely blew past expectations, $3.27 per share of assets. You
know, that was absolutely more than double than what was estimated.
QUEST: So, the earnings per share was expected to be around $1.26 and it comes in at $3.27.
SEBASTIAN: Yes. $3.27. It's extraordinary.
QUEST: How are they doing it? It is just simply more - did they change anything? What happened?
SEBASTIAN: Well, it's interesting because...
SEBASTIAN: ... every quarter, it seems Jeff Bezos comes out and he makes a statement and the earnings is released and last quarter, it was about
Alexa. This quarter, it was about AWS - Amazon Web Services, which is their Cloud business, which is their - by far their biggest cash cow. They
made $5.4 billion in sales on that this quarter.
QUEST: Now, hang on. Let's just put this pause on that because if AWS is making the money, we all think of Amazon as being what we buy...
SEBASTIAN: E-commerce, exactly.
QUEST: E-commerce site and just a brief survey around our studio here has told me just about everybody has bought something in the last day or two.
But you're telling me that's not where the money is made.
SEBASTIAN: Well, Amazon is in a lot of places where you don't see it. They support a lot of internet infrastructure. They run Cloud services
even, Richard for the CIA, another intelligence service. That was a big contract they won. Now, the leader in Cloud, you know, the rivals like
Microsoft and Alphabet that are coming up behind them, but this is something that they have really done well.
And actually, he talks about that. He says, "AWS had the unusual advantage of a seven-year head start before facing like-minded competition. This is
really - it seems be the driver this quarter, but this is not the only one.
QUEST: Does he speak - does Bezos speak about the battle with the President and the question of taxation? Is there anything there that the
market will take?
SEBASTIAN: That may come out in the end. Of course, it was a very long release, Richard. We're still going through it. We haven't seen anything
yet on the personal service or the issue of the fact that they don't pay tax in all states on third-party goods yet, but they are having an earnings
call in about an hour and a quarter, so we'll certainly be listening out for that. He may get questions on that.
QUEST: And when we look at the numbers, the stock price is up 7%, but if you put it unto its total, it's up sort of 50%, 60%, 70% and many -
$1,500.00 a share, $1,400.00 a share and many say that it is on the low side.
SEBASTIAN: Well, it may have more to run. It's up about some 25% this year, which is better than the likes of Facebook for example, but the
growth story has been revived, Richard, by this earnings report and it may have more to run.
QUEST: Okay, come back with us, more tell us on this. Now, two blue chips are losing earnings to announce major corporate makeovers. Let me show you
exactly what they have announced. They are backing off key parts of their business, so for example, we start off with Deutsche Bank which goes behind
the curtain and when it comes the other side, you'll find a new Deutsche Bank that is focusing on European business.
It's basically getting out of a lot of the Wall Street stuff. It's retreating from Wall Street and it is cutting costs. And then, just this
extraordinary announcement to do with Ford. Now, the Ford Motor Company says customers want SUVs and trucks and that's what it is going to do, so
by 2020, it is scaling back dramatically on making cars. Only cars sold in the USA by 2020 will be the Mustang and the Hatchback.
Now, when I heard about this, I thought, "That's very extraordinary. No sedans. No Ford Focus, Taurus and the like." Paul La Monica is here. Why
is Ford doing this?
PAUL LA MONICA, CORRESPONDENT, CNN: Ford realizes that consumers increasingly want these bigger cars, these SUVs, these crossovers. They
are really not finding much demand for the smaller cars even though I think with electric maybe, you're going to get some demand for some of these
smaller vehicles. But, interestingly enough, even as gas prices go up, people in the US and more importantly, China which is a big market for
foreign GM, they want to be driving these SUVs.
QUEST: But as I drive along the road when I am driving, not that I own a car, I mean, see a lot of motor cars. I see ordinary cars, it's not all
SUVs and trucks. I mean, isn't Ford going to miss out on all of those Tauruses, Focuses and the like...
LA MONICA: Yes, it's possible, but I think that when Ford and GM look at what their customers are like right now, you've got families who
increasingly need bigger cars, but then you have people who are also attracted to the ride sharing services of Uber and Lyft and they aren't
buying cars in the first place.
So, if you're going to be catering to the people that actually want a car, it seems like it's the Crossover and not the Focus and other smaller
QUEST: All the others doing similar, aren't they? Fiat Chrysler has already started that move, GM is also.
I want to quickly turn to Deutsche Bank. Dreadful numbers.
LA MONICA: They were really awful numbers and it explains why I think Deutsche Bank has come to conclusion that they need to get out or at least
pare back their Wall Street business. They just aren't...
QUEST: Yes, well, they got rid of the CEO.
LA MONICA: Right, they already got rid of the CEO obviously, which is part of the problem, but Deutsche Bank just hasn't been as competitive with the
other Wall Street giants. Your Goldman Sachs and JP Morgan Chase, the Morgan Stanley's of the world, so they are retrenching at a time where
Barclays actually despite some of their troubles, they are still doing well on Wall Street.
QUEST: Airline stocks? They were hit hard and I don't understand why bearing in mind we've already had Delta...
QUEST: ... and United's earnings. Look at it today. But we've had Delta and United's earnings, they were good and they rallied. I mean, if we look
at the share case, Delta was up 3% and United was up 5% in the day after.
LA MONICA: Yes, well if you want to know why, there are two reasons why, with regards to American Airlines, they warned that rising fuel cost, which
are going to hurt consumers driving cars, too are going to eat in the profits and Wall Street is always forward looking, so that's the problem
with American Airlines.
And in Southwest, that awful terrible accident where you had the passenger who died on a plane recently, they warned that that is having an impact in
their bookings. I think Southwest which had been the airline that most people felt was a loved airline, great consumer service, this could be
something that is going to make people pause before buying a ticket to go on Southwest.
And that's not me saying that, that's the company saying that. Their bookings are down.
QUEST: Their bookings are down.
LA MONICA: And they cited this terrible death...
QUEST: Yes, but to be fair, he also cited the fact that they had stopped advertising.
LA MONICA: That is true.
QUEST: You know...
LA MONICA: Which is a smart move. Kelly knows that you can't advertise in the face of this terrible tragedy.
QUEST: Good to see you, sir.
LA MONICA: Thank you.
QUEST: Thank you. Now, we've just seen that picture of Kim Jong-un with Mike Pompeo. Now the South Korean President is departing from the Blue
House, which is the Presidential Home in just a few hours heading for that historic meeting with the North.
He will meet - the South Korean President will meet Kim and try for the first time in a decade to negotiate an end to the standoff that at times
has threatened to plunge the world in to nuclear war it would seem.
South Korea's Foreign Minister tell CNN the talks could not have happened without the work of Donald Trump.
(START VIDEO CLIP)
KANG KYUNG-WHA, SOUTH KOREAN FOREIGN MINISTER: Credit goes to President Trump. He has been determined to come to grips with it from day one. My
President also, since day one and I think the Presidents Moon and Trump have worked very closely together, sometimes in complementarity; sometimes,
in different messaging, but you know, at the end, the message was North Korea will not be accepted, never be accepted as nuclear power.
And if it continues on this road and provokes that every provocation will be met with further sanctions. But we've also said, if you need to change
it, but if you change course, there's a better future on offer that we are willing to work with you.
(END VIDEO CLIP)
QUEST: Steve Ciobo is the Australian Trade Minister, joins me now. The North Korea - South Korea talks taking place in the next 24 hours coupled
with Donald Trump's potential meeting in the future, which the Minister says it is almost likely to happen. How is Australia viewing this?
Obviously, positive, but with reservations.
STEVEN CIOBO, AUSTRALIAN TRADE MINISTER: Look, it is positive and I mean, this is the first time for a decade or so that we have had both leaders sit
down, so it is a tremendous step forward, but you know, we have seen this before. Not to be cynical about it, but clearly, there's a large number of
steps that may need to be fulfilled in order for the rest of the world to have confidence.
QUEST: And it's by no means clear that the announcement that Kim made of closing down the nuclear testing facility, no more testing. That is not
the same as denuclearization and that word was notably absent.
CIOBO: Yes, yes. And I mean, this is from Australia's perspective, we want to - like in, I think the rest of the world, want to see
denuclearization of the Korean peninsula. But it has got to be verifiable. We have got to know for certain this is happening and that's going to be
ultimately where the rubber hits the road.
QUEST: TPP, I mean, I don't know whatever it is now called, you know, what I am talking about. I heard your press statements after the US said it was
interested and then said, he's got the tweets, it wasn't. What is your understanding of what America wants with TPP. Never mind by the way, we
CIOBO: Sure, my thing is that the President is open to coming back to the TPP if he can renegotiate a better deal. So, that's what is made clear in
terms of this tweets and public comments. I mean, indeed, he said as much at Davos as well, really the (inaudible), but ultimately for the 11 of us
that have done this deal. I mean, we have this deal in the bag. What we are now doing is making sure that we can bring it into a fit as soon as
We can't throw all of these open again to have the United States renegotiate big flaps of ticks.
QUEST: You can't and you won't but then, what is the wiggle room - come on, what is the political fudge that would allow the fig leaf that would
allow US to slide in again? If possible? Maybe it's not possible.
CIOBO: Richard, I can say absolutely that all of us want the United States to come back to the table. I mean, all 11 countries are all committed. In
fact, if you even look at how we structured this deal, if I can use the phrase, we have left sugar on the table to try to entice the US...
CIOBO: ... to come back to this deal because we recognize, not only of the trade benefits, but the strategic benefits as well across the region. But
ultimately, we have now negotiated for more than 12 months, we've got the deal back in the bag, we're well placed to make sure that all of us can
take this forward and be beneficiaries from it.
You know, what's it going to take, what's the political fig leaf, I am not sure there is one. I mean because we can't reopen vast tracks of market
access texts and there are services texts and all the texts to be able to accommodate the US.
QUEST: But it was always intended that TPP would be available for other countries to join. There is always - now, unless it is going to be an EU
arrangement, where you sign up for the chapters that you have to take what already is there, then there needs to be some facility for adapting foreign
new potential entrants.
CIOBO: Absolutely, that's the case. And we know, there is a high level of interest from a number of countries that have already spoken publicly about
their interest in possibly joining the TPP.
As we speak, yes, we are having discussions at an officials level about what we can do. We still have extension by other countries to the TPP, but
ultimately, the framework of the TPP is there. So, yes, we will have negotiations around market access, but that will be within the existing
framework of the TPP 11.
QUEST: When we look at China which of course, Australia's relationship with China is always a fascinating one in terms of trade, you're not just
Australia - China's commodities deliver on this point, but at the same time, the trade dispute with the US.
Look, on this program in the last couple of weeks, at the IMF last week, we have had numerous ministers saying, they are worried about a deteriorating
world trade. You must be as well?
CIOBO: Look, of course, I mean, I don't want to see a situation arise where we actually see very significant action and reaction whether it's the
United States, China, European Union, Canada, Mexico - I mean, there are a host of scenarios that could play out.
Now, that's not in anybody's interest. Let's be very clear. Policy orthodox for the last 50 years shows us that more trade leads to more
prosperity and more employment. That is the benefit, the dividend of flows from greater integration of trade and investment.
So, none of us are interested in having any kind of retaliatory action breaking out on the trade front.
QUEST: Good to see you, as always.
CIOBO: Richard, a pleasure.
QUEST: We will have more earnings updates as we continue. And these two gentlemen are fighting it out in Miami. Oh yes, this is - forget political
fights, this is the real thing with a dose of karate as well.
[16:30:00] QUEST: I'm Richard Quest, there's more QUEST MEANS BUSINESS in just a moment as we continue tonight. I was speaking to one of the
fighters trying to inspire a new generation of karate kids.
And also on tonight, it's one of those beautiful beaches of the world, it's going to be closed, we'll understand why and why it's happening in the
Philippines. But this is Cnn, and on this network, the facts always come first.
The jury in the Bill Cosby retrial has found the TV icon guilty for drugging and sexually assaulting women in 2004. More than 50 women came
and accused Cosby of sexual misconduct in recent years, this was the first allegation to result in criminal charges. The 80-year-old comedian now
faces up to 10 years in prison on each of the three counts.
In a few hours time, history will be made on the Korean demilitarized zone. The South and North Korean leaders will meet for the first time in more
than a decade, it's at a summit laid with symbolism. The big focus in denuclearization of peace settlement and better inter-Korean relations.
President Trump is to visit the United Kingdom on July the 13th, he'll meet the British Prime Minister Theresa May, the trip is not an official state
visit, but she promised it's a working visit. The British Foreign Secretary Boris Johnson said in his words, it will be the greatest visit
Eight teenage girls and one teenage boy have died after flash floods hit Israel in the West Bank. They were members of an Israeli pre-military
academy, they were hiking near the dead sea when the storms hit. While a dozen other members of the group rescued a teenager, another teenager is
The U.S. Senate has approved Mike Pompeo's nomination as Secretary of State, installing the former CIA director as America's top diplomat. The
vote was 57 to 42, he takes the job at a time when several high stakes negotiations are underway around the globe, succeeding Rex Tillerson who
was fired by President Trump by a tweet last month.
General Motors resolved the uncertainty hanging over its business in South Korea. GM and the South Korean government are injecting more than $4
billion to save the division from bankruptcy. GM also released earnings as the other two of the big three makers.
Profits surged at Fiat Chrysler, thanks to strong sales of a Jeep. The car giant is using the extra cash to pay down its debt. Ford shares up more
than 4 percent. As we mentioned, it's scaling that number of vehicles it will offer in the U.S. It's just going to be two types.
Rebecca Lindland is with me, executive analyst at Kelley Blue Book, she's with me. We need your understanding. When you look at these results, what
do they tell you of what's happening?
REBECCA LINDLAND, EXECUTIVE ANALYST, KELLEY BLUE BOOK: They tell me that each of the manufacturer has been a very different position. It's hard to
compare Ford and GM right now because their approaches have been so different.
You know, I was just in Korea last week actually at the DMZ which is a fascinating tour if you're going --
QUEST: Sure --
LINDLAND: To have a go, you know, for your audience. And it's you know, very much dominated by Hyundai and Kia, but it's key that General Motors
get this labor situation resolved and I'm glad that they have, because they've got to have some kind of production facility in Korea.
So by the same token, you know, they have a very good position in China, but Ford is losing money in China and has almost no position --
QUEST: But --
LINDLAND: They are -- but they're OK in Europe, so everyone is kind of different and depending upon the region.
QUEST: And the way they have all come back in their individual ways with their individual strategies. There's a great strength now in the three
U.S. car makers. Which is why I found extraordinary, Ford's announcement today on its cutting back the model. What's behind this?
LINDLAND: It's really about the stock price, it's about profitability, Richard, you know, Ford has been in that like $11, $12 range. I mean,
that's just embarrassing on some level. I'm not a stock analyst but even I know that that can't -- that's really low for a company like this.
[16:35:00] So I think that Jim Hackett, Jim Farley, I think some other guys at Ford right now are just -- they are making those really tough decisions
QUEST: But does it make sense --
LINDLAND: Than maybe are --
QUEST: Does it make sense that this -- I mean, this idea, you know, think about it. Going for two types of vehicles, the SUV and the trucks, with
only two cars, the Mustang and some other one and --
LINDLAND: Yes --
QUEST: All the fiesta, the Focuses, the Tauruses, the bread and butter cars --
LINDLAND: Yes --
LINDLAND: I know, but they're really starting from scratch, and they are just saying we've got to just start a whole new approach. My concern is
that, you know, they're starting something that, well, other manufacturers are well ahead of them already.
So, you know, and again, there's -- it's not that these vehicles won't be on sale, there are just not going --
QUEST: Right --
LINDLAND: To be renewing them, they won't be refreshing them. So certainly, at Kelley Blue Book, we're going to see changes in the residual
values of those products as well.
QUEST: Right --
LINDLAND: So it's going to affect consumers also.
QUEST: All right, really difficult quest, you can plead the Fifth freely. If you -- between the big three, Ford, FCA and General Motors, and I don't
mind whether you take it on the basis of earnings, product line or whether you just like the low go.
Which one of the three are you most impressed with at the moment?
LINDLAND: I have to go with General Motors. From their leadership standpoint, from the hard decisions that Mary and her team have made, the
products, yes, I definitely want to see Cadillac doing better. There's opportunity there with their new leaders --
QUEST: Right --
LINDLAND: Shep(ph) and Steve Carlisle, I hope they'll be able to turn that around.
QUEST: Good to see you, Rebecca, thank you, good to have you --
QUEST: Now, we have major earnings just released to update you on. Microsoft beat expectations, the shares have dipped margin if it recovers
after hours, it is all about the cloud in Microsoft case and we have a beat, Amazon web services.
Intel also beat the shares, they're up 8 percent after hours. Chip business is steady after security concerns. And Starbucks in line with
expectations were down 3 percent after hours first earnings reports since the PR crisis with the arrest of the two black men at their Philadelphia
Now, it's a very confusing environment. Think about last night's program, we tried to understand exactly the undercurrents that's happening in the
market. So having millions of dollars to spend seems perhaps like a good opportunity or maybe a good problem.
John Mathews is here, he's head of the Ultra High Net Worth at UBS.
JOHN MATHEWS, GROUP MANAGING DIRECTOR & HEAD OF PRIVATE WEALTH MANAGEMENT & ULTRA HIGH NET WORTH, UBS: Nice to see you, Richard --
QUEST: That's justifying, so we know what we're talking about. Ultra High Net Worth is what?
MATHEWS: Ultra High Net Worth are individuals, families with $100 million of assets to invest and more, and by the way, that group of population,
that demographic is growing very rapidly.
QUEST: It's very interesting, obviously since I'm so far off, it's like a pipe dream. But if you've got a $100 million, how would you normally
divide that out between real estate, equities, bonds. What's your normal way that you would look at that?
MATHEWS: Well, I think families -- look, I mean, it depends on the family for sure. Everything is customized for ultra high net worth family.
There's always a big real estate component of it, you'll see quite a bit of private companies involved today, public markets are always important and
And which is tricky because rates are on the rise right now, but there's always a portion of cash. And in fact, we find our clients now regardless
of where they are on the wealth spectrum with a larger portion of cash just to take advantage of market depths.
QUEST: OK, now, decide you have taken advantage of a market dip, we've seen -- yesterday on the show, we saw at least four or five occasions when
the market fell sharply. Is that the moment when you will say go in and buy?
MATHEWS: It's not -- we don't look at daily, like daily trends -- most of our clients for the same thing, they're more in it for the longer term.
But if it's a more prolonged market dip over a few days or a week, that's when they start having, you know, more conversations with us and our
conversations with them about is it the right time to go back in.
QUEST: No, but even those three or four-day movement, because the market this year has fooled us all. You get a -- let's take last week for
example. You've got a market that goes down over several days, 300 and 400 points a day -- and you think, oh, that's good moment.
It rallies one day and then it goes back down again.
MATHEWS: Yes, listen, it does create opportunity, it has created a lot of conversations with our clientele. This volatility that we see in just in
the first quarter of this year is really unprecedented, you think about it, the number of days that we've had with these wild swings and it creates
conversations with our clients.
And you know, many will sit on the sidelines and watch it, but there are many they're opportunistic and will dive in at certain times.
[16:40:00] QUEST: All right, I aint got a 100 million --
MATHEWS: OK --
QUEST: But I have got you sitting opposite me.
QUEST: So please, give me the -- tell me the sort of things you're telling people with a $100 million of what they should do.
MATHEWS: Well --
QUEST: What advice are you giving them?
MATHEWS: Well, first of all, it's -- they're all customized again --
MATHEWS: It's all different, but --
QUEST: You know, what I mean --
MATHEWS: Just listen, it's --
QUEST: The principle --
MATHEWS: Well, we -- first of all, regardless of how much money you have, you have to start with some sort of a plan, a foundation of what you want
to do with your wealth, and where you are in the whole kind of longevity of what you're trying to accomplish.
And then the case will be diversified, I mean, we believe and I personally believe you just don't put all of your eggs in one basket, if you do that,
you take a lot of risks, but it's to diversify across all of those asset classes that we just talked about --
QUEST: Sure --
QUEST: And the UBS philanthropy latest philanthropy report --
MATHEWS: Yes --
QUEST: The level at which people are now giving -- there was a few years back where there were some concern, you remember, Warren Buffett made a few
statements in which he questioned why people weren't doing more. Why the ultra rich weren't being prepared to give more. Have we seen that changed?
MATHEWS: We've definitely seen a change. So as you said, we just released our brand new global philanthropy report, is what we did with Harvard,
maybe we can commission them to do the report for us. Three years in the making, only report of its kind, and what we're seeing is philanthropy --
well, it's actually a young sector, it is a very fast growing sector.
To put in perspective, 75 percent of the 260,000 foundations we looked at started in the last 25 years. So it's a new fast-growing sector.
QUEST: And are we looking at -- is there -- can we gain any trends for areas? I mean, are we looking at Carnegie Mellon and building
infrastructures, are we looking at round trees and doing health? What's the trend of where these -- the focus of these funds?
MATHEWS: Yes, I think what we found, what the report told us -- and by the way, it kind of validated what we already knew because we do so much around
philanthropy anyway these days, Richard, is that, you know, you have the big name events like the Gates and the Buffett giving pledges and the
Carnegie like you said.
But underneath that --
QUEST: Yes --
MATHEWS: Level, you don't have a whole lot of collaboration or connectivity. And so it's really all over the place. So one of the
findings of the report I think was very clear was if we can help more closely together create collaboration, maybe we could create more scale.
Because that's the problem we have, it's the scalability of philanthropy.
QUEST: And we hope, you sir, will come and talk about philanthropy and where I should put my $2.50.
MATHEWS: Well, let's do it, let's move to it --
QUEST: Very good, thank you very much indeed.
MATHEWS: Thank you --
QUEST: Enjoy this. Now, as we continue tonight, one day, if you have any idea what this means and what I mean and when I say wax on, wax off, I have
a treat for you after the break.
[16:45:00] (COMMERCIAL BREAK)
QUEST: Now, you really wouldn't want to mess with Alhaji Ndor(ph) from Senegal who now lives in Brooklyn, New York, and is the new face of a
rebooting sport, karate! is back with a bang!
Those sport being repackaged for a young audience with bout stage in a pit instead of a cage. Karate combat offers an alternative to UFC, the
ultimate fighting championships. The fights are short, they look brutal and they come with graphics, showing competitor statistics.
Karate is back on our screens too, Cobra Kai, the karate kid saga is a new series on YouTube, it takes up on the original karate kid films.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Fun time. Daniel Larusso here for Larusso Auto, we are chopping prices on all of our inventories.
(END VIDEO CLIP)
QUEST: Michael DePietro is the CEO Karate Combat, he joins me in the C- suite. What's the idea here? I mean, karate has been around millennial, why does it need to be rebooted?
MICHAEL DEPIETRO, CHIEF EXECUTIVE OFFICER, KARATE COMBAT: You know, right now, karate is you know, just being in -- become a preliminary sport in the
Olympics, and there's a lot of range around it and promoting its athletes worldwide.
We have international athletes signed up to fight full contact in our league which we created in order to form a very nice viewing audience for
the younger generation.
QUEST: Right, full contact, what does that mean?
DEPIETRO: So currently, this sport exists in a semi-contact format where if you were to injure your opponent, you would pretty much get
disqualified. Our athletes train full contact, they train to win, and at the end of the day, they want to have a venue to experience that --
QUEST: Look, at the end of the day, aren't you really hoping that there's a good dose maybe, you know what? You don't want anybody to get hurt, but a
good bit of blood and gore never goes -- nor goes waste. Especially, if you're competing with the UFC, many of the all the other contact sports
that promote this idea.
DEPIETRO: So the blood and gore now, right? But the activity, the action and the fighting, yes. We've adapted the rules to prioritize aggression
over damage, even though these are real professional --
QUEST: Who did that?
DEPIETRO: Fighters mean -- that means that the most active fighters are going to be rewarded more highly than the ones that are counter-punching
and you know, going for the absolute knockout and waiting for their opponent to commit.
We also have taken out knees and elbows, so no elbows means less blood.
QUEST: Yes --
DEPIETRO: Yes --
QUEST: Great, some of us is -- and who is your audience?
DEPIETRO: Our audience is younger generation, we're targeting 18 to 24- year-olds, pretty much, you know, people in the younger end of the millennial generation. They seem to like E-sports and a lot of the video
game-like stuff, and they really like karate as well.
QUEST: Finally, obviously, it's a business. Your revenue model will be a combination of advertising and eventually sponsorship and of course ticket
sales. I'm guessing, you're wanting to turn this into a fairly major event-led sport.
DEPIETRO: Yes, we have -- we're going to have events where --
QUEST: First one is coming up.
DEPIETRO: Live from Miami, we'll be filming it through karate.com and you can look at Karate Combat apps and we have several other distribution
partners that will be filming it as well.
QUEST: Sir, thank you very much indeed.
DEPIETRO: Thank you, and here is the official uniform for Karate Combat, we want to offer you that.
QUEST: The official uniform, what does it do in Pinstripes I wonder? Sir, stand in the -- stand in the light, just there, right. Give us your best
move. Thank you very much indeed, not goodbye --
DEPIETRO: Thank you --
QUEST: Not goodbye, thank you very much indeed, he's worked up a sweat. And he's fighting tonight, if you can see articles in Miami, but as for me,
I shall cherish my karate outfit as soon as I can find a suitable engagement upon which to wear it with my bad back.
And coming up in just a moment, police in Paradise, the Philippines shut one of its most popular tourists attractions where it is overrun with
rubbish and garbage.
[16:50:00] (COMMERCIAL BREAK)
QUEST: So the Philippines is losing one of its most popular tourists spots for a whole six months, and it's all because of pollution. Volunteers are
cleaning up the island of Boracay.
President Rodrigo Duterte has reportedly ordered the island to close after seeing video of sewage on the beach. Cnn's Alexandra Field has the
ALEXANDRA FIELD, CNN INTERNATIONAL CORRESPONDENT (voice-over): They come for the sun, those white sand beaches, to surf seemingly clear blue water.
This is Boracay; one of the Philippines most visited island, chameleon came in 2017, now it's been called a cesspool by the country's own president.
The island, government officials say is overrun with trash and has a waste water problem.
UNIDENTIFIED MALE: On the height of it, we had basically the first 10 meters on the shore line, raw sewage, it was yellowish, smelly, I mean, you
could really smell it.
FIELD: And this is a place that people are coming from around the world to visit --
UNIDENTIFIED MALE: Yes.
FIELD (on camera): This is one of the most famous beaches in Boracay, but all along you'll find this big drainage pipes, they're meant for storm
runoff, but locals say that for years, they've been seeing raw sewage flowing right out of it.
(voice-over): At the end of April, Boracay's beach party ends for as many as six months, clean up and repair work that's already under way, measures
to deal with problems caused by rapid development.
Locals say the water looks better already, but that little notice of a sweeping shutdown could leave them without businesses to come back to.
UNIDENTIFIED MALE: He could have done it in a less dramatic way. You don't need to shut down an entire island, you could shut down phase by
FIELD (on camera): What will this mean for you, for your business?
UNIDENTIFIED MALE: Basically a standstill, no more income still, and also the employees, no more income.
FIELD (voice-over): Boris Decker(ph) runs a water sport school, he fears his employees will leave to find work on other islands and that they won't
come back. Those who make their money off the sport has wind and waves have even bigger fear that tourists will come back after.
UNIDENTIFIED MALE: The damage is done already.
FIELD: Christopher Nacole(ph) says his water sports business is losing money even before the official shutdown begins.
UNIDENTIFIED MALE: They said, oh, we don't want to come back to Boracay, it is dirty. So it's right, I mean it's affecting us already.
FIELD: Swimming will be banned, flights are being canceled, the government says calamity funds will be available for affected workers. Phil Jimman
Salvador(ph) is a tour guide who says he isn't sure how he'll get by. Boracay is popular, the world over as a wedding destination.
UNIDENTIFIED FEMALE: I ended up crying, she ended up crying, we were both crying, very emotional of course.
FIELD: Wedding planner, Amanda Taro(ph) says her employees, her vendors and her venues will all feel the effects. Then there's the heartbreak too.
UNIDENTIFIED FEMALE: That all of a sudden, the wedding of their dreams can't happen anymore. We actually have some brides that were crying and
saying, you know, the wedding of their dreams aren't going to happen anymore.
FIELD: The promise is that Boracay will look better by the time the next high season starts six months from now.
[16:55:00] The fear here is that the visitors won't come back to see it. In Boracay, Alexandra Field, Cnn.
QUEST: And we'll take our profitable moment after the break.
QUEST: Tonight's profitable moment which comes from the spiral staircase. We have good results, excellent, brilliant, superb, superlatives cannot be
added for Amazon and its share price is up some 6 percent in afterhours trading.
And what we are seeing is a very good distribution now of corporate America and how the market has reacted. Who has been punished, who has been
praised. You got United which had good results and was praised. Facebook, excellent numbers, praised. Amazon praised.
And then you have the banks, all the banks, Morgan Chase, Wells Fargo, PNC, Goldman Sachs all punished at the other end of the spectrum. What it's
showing is that a market that's priced to perfection is going to come down hard on those companies that do not meet or at least exceed considerably
Now, we can have an interesting discussion about whether the Amazon has somewhat misled the market with such a low guidance and a high performance
if that's enough to be normal. The reality is as the spiral staircase is showing, we're in very difficult times with many companies doing well, but
not being rewarded.
And that's QUEST MEANS BUSINESS for tonight, I'm Richard Quest in New York. Whatever you're up to in the hours ahead, I hope it's profitable, I'll see